Under the current system, a charity must apply to the relevant local authority for a licence for every collection it carries out.

In theory, 10 collections from homes in a single street all require separate licences but, if a charity has collected in at least 70 separate areas of a local authority for two years consecutively, it can apply for a national exemption order instead of individual licences. The orders last for two years.

But Hodgson’s report proposes abolishing the exemption orders because he wants to create a more level playing field for smaller charities.

The British Red Cross said it was "deeply concerned" about the proposal, which it said could cost it up to £20m over the next five years.

"The report contains a body blow for some of the UK’s best loved charities which has come entirely out of the blue," said Mark Astarita, director of fundraising at the charity.

"Charity shops could close and millions of pounds of donated income could disappear as charities are buried under new paperwork.

The British Heart Foundation, which undertakes 100,000 doorstep collections every year, estimated the proposal would cost it £650,000 each year in staff time to fill out the appropriate forms, equivalent to funding five cardiac nurses for three years.

The charity said the system would be clogged with requests for licences and clothing stock would be held up from the charity’s high street shops, costing a further £400,000 in sales for every 1 per cent drop in stock.

"Applying for individual licences is not realistic, feasible or remotely sustainable for us," said Mike Taylor, retail director at the BHF. "If the Cabinet Office goes ahead with the proposal it will simply divert vital funds from life-saving research into form-filling and red tape."

Peter Lewis, chief executive of the Institute of Fundraising, said it would negotiate with the government on behalf of charities.

"We will try to make sure any new system doesn’t cost charities any money and we expect to be listened to by the government," he said.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.